Regulation of ‘outstaffing’ in Russia

26th of June 2014

Oleg Popov of Cristanval Cleaning talks about outstaffing and its central role in the Russian cleaning sector.

Cleaning companies often provide an ancillary workforce for customers. This manpower is not all directly engaged in cleaning services: it could be loaders, compactor operators, unskilled labourers, merchandisers, etc. Outsourcing staff - ‘outstaffing’ - has become a central segment of the industry but Russian labour law has been silent on the matter. Now it appears outstaffing is about to enter Russian legislation.

Large retail chain stores, hotels and warehouses are rather reluctant to hire too many companies, as it will take time and effort to fill vacancies and hence increase the man-hours of HR personnel.

Large retail chains prefer to hire one company for each class of the worker needed, where the ‘class’ is determined by the qualification level required. For example: cleaning personnel and loaders are one class of personnel, whereas cashiers and administrators are grouped into a class of personnel one step higher in qualifications, and so on.

Outstaffing first appeared about the same time as the cleaning industry did. Since 2011 outstaffing has become increasingly popular. Expert opinion says: “Currently the market for outstaffing services in Russia provides employment for several hundred of thousands of people across many industries. Most recent research provided by the Higher School of Economics revealed that, in general, workers who worked in an ‘outstaffing environment’ are satisfied with this business model.

There is insufficient legislative support in Russia to run this kind of operation however. Inevitably, laws are deliberately violated, causing employee rights in the workplace to come under threat as their employment is spreading amongst smaller and unknown firms. There are now firm proposals for outstaffing legislation, however, and - should the law be passed - it will come into force in January 2016.

The proposed law says only two kinds of organisations can provide outstaffing services:

• Private HR agencies, provided they maintain accreditation;

• All organisations employing people to be outstaffed to another company must first establish which of the two companies will play the supervisory role, while the other company must report to the supervisor.

The law will establish the requirements the outstaffing agencies must satisfy in order to become accredited, such as:

• Charter capital must exceed one million rubles;

• The company must maintain good standing on payments to the IRS and any governmental agency.

Certain provisions describe the requirements set for the party listed as ‘receiving party’ in the labour agreement. For example, remuneration of the outstaffed worker cannot be set lower than that of the permanent worker in the receiving company, provided his skill level matches that of the outstaffed person.

The law will also contain regulatory provisions, especially pertaining to the agreement with the outstaffed person. For example the law currently being discussed forbids the outstaffing agency from providing workers to replace permanent personnel if they go out on strike.

Regulation will ultimately assist outstaffing agencies and receiving companies by enabling them to show themselves as reputable entities; by following the law they gain experience and credibility. Workers will also be protected from dishonest employers.